Truist Financial has agreed to acquire a Florida-based home improvement lender for $2 billion.
The purchase of Service Finance Co. would widen the scope of Truist’s point-of-sale lending business to include financing to homeowners. The Charlotte, North Carolina, bank currently offers loan options for buyers of power equipment, trailers and other consumer products.
“The acquisition of Service Finance expands the scale and capabilities of our wholesale payments businesses, enabling Truist to deliver innovative financing solutions to Service Finance's nationwide network of dealers and serve homeowners across the country," Mike Maguire, Truist’s head national consumer finance and payments, said in a press release Tuesday.
The announcement comes two months after Birmingham, Alabama-based
Truist and Service Finance already have a relationship. Service Finance has sold about $2 billion in loans to the $522 billion-asset bank over the past three years.
Service Finance provides a platform over which its roughly 14,000 contractors and dealers offer financing to homeowners. The Boca Raton company’s loan originations are expected to top $2.5 billion this year. Its loan growth has reached about 30% annually over the past three years, Truist said.
Mark Berch, a former home improvement contractor, founded Service Finance. He and his team will join Truist’s point-of-sale business but continue to be based in Boca Raton. The company was attractive to Truist, in part, because of its technology. More than 80% of its loan applications are completed on its mobile application, Truist said.
The deal was also attractive, Truist said, because Service Finance generally targets borrowers with high credit scores. The company’s borrowers average a FICO score of more than 760, according to Truist.
Truist said that it expects to earn about a 3% return on Service Finance’s loans, and also to be able to reduce how much capital it holds against potential losses.
"This is a dynamic market with tremendous potential, and joining Truist only improves our outlook for growth,” Berch said in the press release.
